Did Prime Minister Stephen Harper have foreknowledge of a backroom deal between his now former chief of staff, Nigel Wright, and Sen. Mike Duffy, in which the latter’s $90,172 tab for improper housing expenses would be made to go away?

That question now takes centre stage, as Harper finds himself, for the first time in his seven-plus years in power, in the grip of a full-blown crisis at the highest levels of his government, with as-yet unknown consequences for all the players involved, including him. Tuesday, the PM is set to meet with his caucus.

On Sunday morning, Nigel Wright, Harper’s chief of staff, announced through a written statement that has resigned in the wake of controversy over how he wrote a personal $90,000 cheque to repay Conservative senator Mike Duffy’s housing expenses. Harper’s principal secretary, Ray Novak, has been appointed to replace Wright as chief of staff.

“My actions were intended solely to secure the repayment of funds, which I considered to be in the public interest, and I accept sole responsibility,” wrote Wright.

“I did not advise the Prime Minister of the means by which Sen. Duffy’s expenses were repaid, either before or after the fact.”

The government stunned Conservative insiders and opposition critics last week when it revealed that — after public lauding Duffy for doing the honorable thing by repaying the funds, — it had actually been Wright who had paid the money to Duffy as a favour.

Government officials described it as a gift, with no expectation the money would be paid back.

That quickly prompted the ethics commissioner to announce she would investigate the matter, and led opposition MPs to allege a cover-up in which Wright, a multi-millionaire, had dipped into his own funds to resolve a political problem embarrassing the government and to hush Duffy from commenting on the affair.

Since the scandal involving Wright broke mid-week, neither Harper or his right-hand man have publicly spoken about the matter.

In his statement Sunday, Wright said: “I regret the impact of this matter on the Government, our Caucus, and all of my colleagues, for whom I have the highest regard. I came to Ottawa to do my part in providing good government for Canada, and that is all that I ever wanted and worked for in this role.”

The prime minister also immediately issued a statement of his own.

“It is with great regret that I have accepted the resignation of Nigel Wright as my Chief of Staff,” said Harper.

“I accept that Nigel believed he was acting in the public interest, but I understand the decision he has taken to resign. I want to thank Nigel for his tremendous contribution to our Government over the past two and a half years.”

Novak, who now takes over from Wright, has been one of Harper’s longest-serving aides dating back to his years in opposition.

The controversy is expected to continue Tuesday, as MPs return to the House after a week-long break.

Harper will not be in the Commons because he is on a trip to South America, where it’s expected he won’t face questions on the scandal over Duffy and Wright until a news conference on Wednesday.

On Sunday, NDP ethics critic Charlie Angus said Wright’s resignation still leaves a number of unanswered questions about the details of his $90,000 cheque to Duffy.

“This is a party and a government that is in full-fledged panic. They tossed Pamela Wallin overboard on Friday, they tossed Duffy over on Thursday; Nigel Wright was the obvious next choice,” Angus said.

“What they need to understand is that this isn’t going away. This is a scandal that is tied directly to the prime minister now and it involves very, very serious allegations.”

Angus said Wright still has to explain what exactly was involved in the $90,000 payment, and he reiterated his party’s call for an independent investigation into the matter.“The prime minister needs to understand that this ties directly to him, because it happened in his office,” he said. “If he has done nothing wrong, if he wasn’t part of this, then the prime minister should have nothing to fear. Bring in an independent investigator, and let’s get the facts on the table for Canadians.”

Liberal MP Bob Rae told CBC News that people will have to take a “hard look at what actually took place.”

“It’s unbelievable to me that the prime minister of Canada would not be aware and would not be asking questions about the circumstances in which a payment of this kind was in fact made,” said Rae.

“A payment was made which had a direct impact on the conduct of a government investigation. There’s something very wrong with that.”

Wright’s resignation is the latest, most devastating fallout from a Senate scandal that has now become a political nightmare for the Conservative government.

The government had staunchly backed Wright through the week, with Harper’s chief spokesman, Andrew MacDougall, flatly telling reporters Friday that Wright was staying on in the PMO and repeating that Wright had the full confidence of the prime minister.

Wright was on an extended temporary leave of absence from his job at Onex Corp., a private equity firm in Toronto. He became the prime minister’s chief of staff in January 2011 and had stayed in his PMO job longer than his initial plan of two years. His resignation will leave a huge gap in Harper’s office.

Wright has deep roots in the Conservative party, having worked in the PMO in the 1980s under then-prime minister Brian Mulroney. He was also an early supporter of Harper in his bid for the Conservative leadership.

It was during those years with Mulroney that Wright first met Duffy, who was a parliamentary reporter at the time.

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